Russia has reportedly handed China $20 billion in oil discounts since 2022, as the Kremlin struggles with a deepening budget shortfall. Rosneft CEO Igor Sechin made the revelation during a Beijing energy forum on November 25, framing the heavily discounted sales as an example of China’s “procurement efficiency,” implicitly acknowledging Moscow’s financial loss.

The Russian budget has been under pressure as oil revenues tumble. October receipts fell by 27% compared to the same month last year, with November expected to drop around 35%. The price of Urals crude relative to Brent widened to $23.52 per barrel in mid-November, marking the steepest discount since May 2023. Meanwhile, the Kremlin has increased VAT to 22% to offset the shortfall, effectively subsidizing a major rival economy.

Analysts point to sanctions as the key driver of Russia’s steep oil discounts. After the US Treasury sanctioned Rosneft, Lukoil, and several subsidiaries in October 2025, Urals crude prices at Russian ports plunged to $20 below Brent. For Chinese buyers, ESPO crude discounts doubled, pushing savings further.

India, Russia’s second-largest crude buyer, also benefited from the Kremlin’s pricing strategy, saving roughly $12.6 billion since 2022. Combined with China’s $20 billion, Moscow’s oil sales have effectively lost around $33 billion—equivalent to 1.5 times Russia’s annual higher education budget or several years of expenditure for wealthier regions like Krasnodar Krai or Sverdlovsk Oblast.

Former Ukrainian Infrastructure Minister Volodymyr Omelyan described the situation as “strategically absurd,” noting that while Russia maintains market share in China, it does so at a significant revenue loss and reduced geopolitical leverage. In 2024, Russia accounted for nearly 19% of China’s energy imports, valued at around $100 billion, yet much of this market share came at a discount.